Burgeoning online ad spend will pass TV next year, says WPP

UK advertisers are set to spend more online in the coming years, leaving TV trailing in the media spend sweepstakes by 2009, acc-ording to the advertising giant WPP.

The forecast was made by Group M, a subsidiary of Sir Martin Sorrell's WPP group, which expects UK internet advertising revenues to swell by more than 30 per cent to 3.4bn this year. TV advertising, on the other hand, is expected to grow by less than 1 per cent to 3.56bn in 2008. And by 2009, after Sweden, the UK is likely to become the world's first major economy to witness the ascent of the internet past one of its biggest rival mediums in the advertising arena.

"It will be a milestone achievement," said Adam Smith, futures director at Group M and the author of the forecast. "Sweden will get there this year, and the UK is probably going to be next, in the following year."

Mr Smith also said that the internet will develop as a key complement to TV advertising, adding: "When we talk about internet advertising, we are talking about a mix which includes search, display and classified advertising. Out of that, search accounts for around 60 per cent, and that money is not coming from TV ad budgets. The internet will sit beside TV as an increasingly important avenue for advertisers.

According to Group M, online advertising revenues were at the 43m mark in 1999. By 2004, the numbers had edged past 700m and climbed to almost 2bn in 2006. Television advertising growth hit the brakes and went into reverse during the same period, declining from +7.9 per cent year-on-year in 2000 to -4.1 per cent in 2006. Group M ex-pects 2007 to reveal a recovery of growth to 3.3 per cent, followed by a dip to 0.9 per cent in 2008.

"It's become very important, very fast," said Wayne Arnold, European chief executive of Profero, a leading digital marketing agency, "Eighteen months ago, you could have managed to get away without building online into your advertising and marketing strategy, but, if you're the manager, you'd probably get fired now. It cannot be ignored.

"The internet appeals to consumers in a way that TV does not. Over the past 50 years, advertisers have learnt how to shout down to people, but the internet offers interactivity, unlike TV. The little red button on television remote controls, for example, was more of a red herring than anything else: you press it, you get a longer advert and your TV experience is interrupted. That does not happen online where interactivity adds value to the user experience that's quite important in winning the attention of your customers."

A recent survey by Forrester Research underlined the importance of the internet as an advertising medium. Forrester asked a sample of European adults how much time they spent watching television and on the internet. The results revealed internet usage rose significantly as members of the sample spent more and more time online and ultimately surpassed the time they spent watching TV.

Rebecca Jennings, a senior analyst at Forrester, noted that a number of advertisers remained wary of the internet despite the evidence, but added: "This kind of milestone, when internet overtakes TV, will really bring it home to the industry that this is a medium to be reckoned with."

She added: "Looking ahead, I think advertisers will start using high rates of broadband usage to grow other parts of the mix. Search will remain important, but it will probably grow at a slower rate than the other components of the online media mix as advertisers exploit other areas. For example, they may use more video ads on websites as more people switch to a higher bandwidth."

The Group M forecast also noted the growth prospects of online video. Group M's Mr Smith said: "FMCG [fast-moving con-sumer goods] is a small minority of online display investment. This is, however, set for rapid growth... Faster, cheaper memory makes the production, distribution and storage of video easier. Video is the mother tongue of FMCG marketing. It is also 30 per cent of all web traffic already. Advertisers are aware of the need to find the under-35s TV is giving up, and that a website [alone] may not be enough [to attract them]."